debt consolidation

topspin100
topspin100 Posts: 3 Newbie
in Loans
Hi! As my credit card's 0% period is coming to an end I'm looking to consolidate my debt with a (cheaper) loan. My overall credit score is quite good (no missed payments etc.), but the affordability score is pretty low because of my relatively low income. I have recently taken up another part-time job and this increases my annual income by about 50%. How long will it take until this is being taken into account by potential lenders, does anyone know? Do I need to wait until the first payslip from the new job, or even the first three, or...?

I don't want to mess up my chances of getting a loan by applying into the blue. Many thanks in advance for any replies!
«1

Comments

  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    First Anniversary Photogenic Name Dropper First Post
    It varies by lender.

    What's your debt and income? If you go for a loan, yo'll be asking a lender to double your debt.

    Have you looked at BT options, or tried an eligibility checker? Ignore your credit score, but try some soft searches instead.
  • topspin100
    topspin100 Posts: 3 Newbie
    Thanks for your reply. Debt is £6k, income about 18k p.a. (only taking effect next month). Applied for a new cc to transfer balance at 0% a while ago, but their credit limit was too low because of my income. :-( Have tried eligibility calculator, but unsure if and when I can add 2nd income to my gross earnings....
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    First Anniversary Photogenic Name Dropper First Post
    You should have taken the card and transferred what you could.

    Make sure you don't turn down any future promo offers.

    You can use your new income once you start earning it.
  • DCFC79
    DCFC79 Posts: 40,598 Forumite
    Name Dropper First Anniversary First Post
    topspin100 wrote: »
    Hi! As my credit card's 0% period is coming to an end I'm looking to consolidate my debt with a (cheaper) loan. My overall credit score is quite good (no missed payments etc.), but the affordability score is pretty low because of my relatively low income. I have recently taken up another part-time job and this increases my annual income by about 50%. How long will it take until this is being taken into account by potential lenders, does anyone know? Do I need to wait until the first payslip from the new job, or even the first three, or...?

    I don't want to mess up my chances of getting a loan by applying into the blue. Many thanks in advance for any replies!


    Consolidating rarely works unless your willing to stick to the plan. Reduce your spending so you have more money to use for the card debt.
  • topspin100
    topspin100 Posts: 3 Newbie
    DCFC79 wrote: »
    Consolidating rarely works unless your willing to stick to the plan. Reduce your spending so you have more money to use for the card debt.

    Well, I'm sure at least my credit card company would approve of this kind of advice! :j

    Paying off the cc at 19.9% APR will obviously cost me a lot more than, say a 5-year loan!
  • Larac
    Larac Posts: 945 Forumite
    First Anniversary First Post
    DCFC79 wrote: »
    Consolidating rarely works unless your willing to stick to the plan. Reduce your spending so you have more money to use for the card debt.

    Wise words - been down this route and got the t-shirt. Few years later ended up on a DMP. By consolidating - it does not address the problem of the 'overspend'.
  • Dobbibill
    Dobbibill Posts: 4,134 Ambassador
    First Anniversary Mortgage-free Glee! Name Dropper First Post
    OP - do a soft search on CCs for a BT before applying - once you've done an application, take whatever limit they offer (some at 0% is better than none).
    A 2nd card could take care of the remaining interest bearing balance (limit permitting) - a consolidation loan rarely works even with the best intentions. If you were to apply for a loan your rate would be based on the providers assessment of you at the time and may not be lower than 19.9%, some posters have been offered 24% etc.
    I’m a Forum Ambassador and I support the Forum Team on the Budgeting & Bank Accounts, Credit Cards, Credit File & Ratings and Energy boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    If you can't be the best -
    Just be better than you were yesterday.
  • System
    System Posts: 178,093 Community Admin
    Photogenic Name Dropper First Post
    topspin100 wrote: »
    Well, I'm sure at least my credit card company would approve of this kind of advice! :j

    Paying off the cc at 19.9% APR will obviously cost me a lot more than, say a 5-year loan!

    Only if you don't use the credit card again. If you do then you'll have a loan and a credit card to service.
  • Nasqueron
    Nasqueron Posts: 8,784 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    topspin100 wrote: »
    Well, I'm sure at least my credit card company would approve of this kind of advice! :j

    Paying off the cc at 19.9% APR will obviously cost me a lot more than, say a 5-year loan!

    The problem is that for every 1 person who will pay off a CC with a loan, cut it up and never use it again there will be 10s, if not 100s, who see an empty CC and run it up again meaning the loan + CC is now 2x as much debt. Remember you have a CC which you have known had an end date since you took it out yet haven't got it paid off and now you want to take on more debt on top?

    That is why banks now check affordability of a loan and base a decision on whether you could afford both debts together because there is no guarantee you will use the loan for the CC. Remember Ocean Finance and their adverts where people were shown saving money on monthly repayments and then going off sunning themselves on a beach? Those are the typical people who consolidate. Even if it's not a beach, it's the sudden car bill, the home repair, kids need new stuff etc etc

    You would be best approaching your CC firm and if they do loans, get them to do the loan, pay off the CC themselves and then close it, removing any chance of the money being used elsewhere. Otherwise, apply for another BT card, ideally one aimed at the lower end of the market and whatever limit you get, use it, pay the minimum and hit the remaining balance on your main card hard
  • MEM62
    MEM62 Posts: 4,746 Forumite
    First Anniversary Name Dropper First Post
    DCFC79 wrote: »
    Consolidating rarely works unless your willing to stick to the plan. Reduce your spending so you have more money to use for the card debt.
    topspin100 wrote: »
    Well, I'm sure at least my credit card company would approve of this kind of advice! :j

    Paying off the cc at 19.9% APR will obviously cost me a lot more than, say a 5-year loan!

    The advice from DCFC79 is sound. Reduce your spending so that you reduce your card debt faster. That is by far the best way to reduce exposure to interest. Consolidation loans often carry a higher interest rate and over a length period can be just as expensive a CC debt that is paid off quicker.

    The general wisdom here is that consolidations loans do not work and I am sure that you arrived here because you held the belief that these guys know what they are talking about. You have the opportunity to learn from other peoples experience / mistakes. Don't let that pass you by :-)
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.8K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards